Credit card: cash withdrawal

flergalwit

As we all know, you should never withdraw cash using credit cards (unless it is a total emergency and there really is absolutely no other option).

Regarding the possibility of paying income tax by credit card, Martin writes back in 2008:

"The other [potential drawback] is more damaging; it is possible credit card companies could count this is a ‘cash withdrawal’ in which case it’s a nightmare as it won’t be at zero percent and even if you pay the card off in full you’d pay interest on it. We need to watch out for that one, as it’d be a scandalous disgrace if it happened."
http://blog.moneysavingexpert.com/2008/01/11/pay-tax-by-credit-card-fantastic-news%E2%80%A6-for-some/

This got me thinking. Are there any other times a credit card transaction may be counted as a cash withdrawal?

Just as examples I was thinking of paying for (a) my council tax(*), (b) skype credit, (c) mobile phone credit by credit card. I assume none of these count as cash withdrawals or we'd have heard about it, but can anyone confirm this? Does anyone know whether income tax ever counts as a cash withdrawal, as suggested by the 2008 blog?

Are there ANY known examples at all of a credit card transaction counting as a cash withdrawal apart from the obvious ones where you actually end up with cash in your hand?

(*) there's a 1.8% credit card fee but I can more than make that back from cashback + stoozing

chattychappy

flergalwit wrote: »

As we all know, you should never withdraw cash using credit cards (unless it is a total emergency and there really is absolutely no other option).

No, not "never". I draw cash overseas on Santander Zero all the time. No loading, no fees. Only a few days' interest which is peanuts compared with other methods of getting cash overseas. Also avoids my risking my debit card being swallowed which would stop my using internet banking (which requires its use in a card reader).

Whilst drawing cash on a CC is usually expensive, there are a growing number of exceptions.

flergalwit wrote: »

Regarding the possibility of paying income tax by credit card, Martin writes back in 2008:

"The other [potential drawback] is more damaging; it is possible credit card companies could count this is a ‘cash withdrawal’ in which case it’s a nightmare as it won’t be at zero percent and even if you pay the card off in full you’d pay interest on it. We need to watch out for that one, as it’d be a scandalous disgrace if it happened."

It's not happened.

flergalwit wrote: »

This got me thinking. Are there any other times a credit card transaction may be counted as a cash withdrawal?

Just as examples I was thinking of paying for (a) my council tax(*), (b) skype credit, (c) mobile phone credit by credit card. I assume none of these count as cash withdrawals or we'd have heard about it, but can anyone confirm this? Does anyone know whether income tax ever counts as a cash withdrawal, as suggested by the 2008 blog?

Are there ANY known examples at all of a credit card transaction counting as a cash withdrawal apart from the obvious ones where you actually end up with cash in your hand?

As far as I know, it is still just cash and cash equivalents (eg Traveller's Cheques) and gambling. In fact, I have done (b) and (c) this week!

flergalwit

Thanks.

chattychappy wrote: »

No, not "never". I draw cash overseas on Santander Zero all the time. No loading, no fees. Only a few days' interest which is peanuts compared with other methods of getting cash overseas. Also avoids my risking my debit card being swallowed which would stop my using internet banking (which requires its use in a card reader).

Whilst drawing cash on a CC is usually expensive, there are a growing number of exceptions.

All right. I was implicitly talking about the UK. In normal situations, there is no reason to withdraw cash using a credit card when you could use a debit card.

However your comment does suggest a further question. What if your credit card balance goes positive? (Either by accident - e.g. a year ago I mistakenly paid off my monthly balance twice - or maybe the company gives you some initial credit.) Is it then safe to withdraw the positive balance as cash? Or would you have to pay interest?

rb10

flergalwit wrote: »

However your comment does suggest a further question. What if your credit card balance goes positive? (Either by accident - e.g. a year ago I mistakenly paid off my monthly balance twice - or maybe the company gives you some initial credit.) Is it then safe to withdraw the positive balance as cash? Or would you have to pay interest?

It breaches the T&Cs to allow your card to go into a positive balance.

However, if you did end up in that situation, then you wouldn't be charged interest, but would still have the cash advance fee (if applicable).

lisyloo

Is it then safe to withdraw the positive balance as cash? Or would you have to pay interest?

As above, you should not do it on purpose, but if it happens by accident then you do not get charged interest as you are not borrowing money.
However you may get charged a "cash advance fee" by your credit card company and you could also get charged an ATM fee by the operators of the ATM althought this would be explicity displayed.
This seems quite fair enough to me as obviously there is some cost to filling machines all round the country in order for you to have the facility.

The cheapest way to use a small credit would be to buy food/petrol in the normal course of your life. If it was a large amount then you need to contact customer services to get it refunded so there is no need to pay cash advance fees if you don't want to, although if you are in a rush then it's a relatively small fee.

On the general topic it should be pretty obvious that getting foreign currency is "cash".
The only one that isn't obvious is gambling.

BTW - it's a cash "advance" and not "withdrawal".
I'm not one for being pedantic over words but in this case I think it might be adding to your confusion because it isn't necessarily cash in your hand physically, it's advancing cash to you. When you purchase goods and services the retailer pays a fee so I guess when they advance you cash they don't get that fee.

I've never credited a gambling account but I agree it should be made clear.

chattychappy

flergalwit wrote: »

In normal situations, there is no reason to withdraw cash using a credit card when you could use a debit card.

Yes. Of course sometimes people get themselves into situations where they don't have money in their current account. In this situation, getting a cash advance on a CC might be a cheaper form of borrowing than say, a pay day loan. or the costs of arranging an overdraft for what might be a one-off situation.

flergalwit wrote: »

However your comment does suggest a further question. What if your credit card balance goes positive? (Either by accident - e.g. a year ago I mistakenly paid off my monthly balance twice - or maybe the company gives you some initial credit.) Is it then safe to withdraw the positive balance as cash? Or would you have to pay interest?

Agree with the answers given already. In principle you won't pay interest, but you will still likely pay any cash advance fee etc. I say "in principle" because difference CCs might have slightly different rules about application of credit balances (not yet statemented) against future transactions that are not yet statemented. There was a thread a while back where in a similar situation somebody had apparently ended up paying interest that he hadn't expected.

corbyboy

One that often catches people out (but is obvious if you think about it) is buying foreign currency from travel agents. That counts as a cash withdrawl.

jason1231972

Online gambling. I put a tenner on the Grand National using a credit card. My luck being what it is, I backed 4 donkeys each way (including one of the poor blighters that died). My return was £11, but my credit card (Capital One) charged me £3 for the transaction, leaving me £2 out of pocket.

jason1231972

corbyboy wrote: »

One that often catches people out (but is obvious if you think about it) is buying foreign currency from travel agents. That counts as a cash withdrawl.

Every time I/we go to buy travel money on my (actually my partner's) HSBC Visa debit card, we're warned that due to some changes in the Visa payment network, this will also count as a cash withdrawal, and will incur charges just like CCs always did. My partner insists that HSBC don't do this, but we always go through a big charade and just end up buying cash with cash instead, just in case!

chattychappy

jason1231972 wrote: »

Every time I/we go to buy travel money on my (actually my partner's) HSBC Visa debit card, we're warned that due to some changes in the Visa payment network, this will also count as a cash withdrawal, and will incur charges just like CCs always did. My partner insists that HSBC don't do this, but we always go through a big charade and just end up buying cash with cash instead, just in case!

Yep, debit cards for travel money are the real catch! (Though I think this is changing.)

Some credit cards create specific exceptions. Eg the PO card doesn't charge the usual fee (but does charge interest I suppose) on travel money at the Post Office. One of my other cards has a similar deal with Thomas Cook.

Of course travel money over the counter in the UK is almost always expensive because of the awful rates.

dzug1

jason1231972 wrote: »

Every time I/we go to buy travel money on my (actually my partner's) HSBC Visa debit card, we're warned that due to some changes in the Visa payment network, this will also count as a cash withdrawal, and will incur charges just like CCs always did. My partner insists that HSBC don't do this, but we always go through a big charade and just end up buying cash with cash instead, just in case!

HSBC don't charge - some visa debit cards do, some don't.

There's a list (very well hidden) in Martin's guide